The New York Times documents markets’ continued fall in the face of an intensification of the crisis of capitalism:
What can we take away from this? I’ll try to post some explanations over the next few days.
The front page of the NYT has a story that outlines one of the roots of the crisis here. Contrary to what the overly optimistic article states, the disproportionate “contribution” of the rich to consumer spending is a symptom of disease, not of “recovery.” What we are seeing here is the massive inefficiency of resource distribution under capitalism. The rich simply cannot provide the effective demand necessary to sop up overproduction and promote growth. The working class MUST consume a large portion of its alienated product or the whole capitalist ponzi scheme will come crashing down. As David Harvey states in The Enigma of Capital and the Crises of Capitalism:
Given the wage repression that has occurred worldwide (though unevenly), the capitalist class in general has had an expanding stream of revenues at its command and the demand for luxury goods has plainly grown to a corresponding degree (go to any marina in Florida or around the Mediterranean, look at the yachts and cruise boats moored there, then contrast this with what you would have seen in 1970 and you will get the point). But for all the conspicuousness of its consumption habits, there is still a physical limit to the number of yachts, MacMansions or pairs of shoes that the billionaire class can consume. Capitalist personal consumption, it turns out, is a very weak source of effective demand. The more that the centralization of capital concentrates wealth in the hands of a very small group in the population (such as the 300 or so families that the UN development report of 1996 showed controlled 40 per cent of the world’s wealth) the less effective is their consumption in bolstering demand (110).
Keynesians and Social Democrats have been repeating this point again and again in the face of neoliberalism, but like most all of the lessons of the 1930s this one is ignored, and the ruling class’ only response remains “Après moi, le déluge!” This gross irresponsibility to which the ruling class is compelled, both by its own greed and the compulsive force of the banker’s ledger, everywhere takes on the form of “fiscal responsibility” and “austerity” (The capitalist’s austere sensibilities are on ample display in the show rooms of Porsche and Louis Vuitton as the article clearly points out).
Yet even as the capitalists seek to balance their books on the backs of the workers, they undermine the basis for the continuation of capitalist expansion. Although the years since the 2008 crisis have seen the capitalists and their good friends in government gloating over their “recovery” and their corporate accounts flush with cash, carrying on their program of wage repression and the looting of public assets with gleeful abandon, this atmosphere has been constantly tinged with unease. The dream that value could truly become self-expanding, which seizes the capitalist class in every one of their orgies of speculative excess, is nevertheless always suspected (with good reason) of being too good to be true. With the crises in Europe and America continuing to expand this unease turns to fear and the selling begins. Will fear turn to terror and a downturn into a crash? Given the complete lack of even the most modest of meaningful reforms since 2008 the answer seems a foregone conclusion, but only time will tell when the other shoe will drop. Unfortunately the joke in this comedy of errors is on us, and the capitalists continue to laugh all the way to the boutique.